Understanding the CoreValue Methodology

Operational performance -- what a company 'does' to generate revenue and profit - is how we look at business.

On the surface, CoreValue is an elegantly simple tool. Underneath, our complex  algorithms,  vetted by thousands of businesses, advisors and academics over 30 years, give companies the data and tools necessary to build sustainable, transferable Enterprise Value.

After  providing  information  about  the  company  including  industry, annual revenue and  profit, we  ask a series  of questions about  18  Value  Drivers  so  we  may  compare  the  company’s  status  relative  to  best  practices.  Each  level  of  CoreValue  asks  more  detailed  questions about the drivers. In all, we offer a 239‐point assessment. 

Scores are applied and ratings are calculated, based on the answers provided to the survey questions. We then plot the company’s Enterprise Value and compare it against an industry norm to create a value gap. This identifies a company's strengths, risks, and vulnerable areas,  and how much value is being left on the table due to operational and market deficiencies. 

Our  algorithms  measure  the  risk  to  future  revenues  presented  by the company's current  operational  processes  and  procedures,  and  calculate  Enterprise  Value  for  the  company  based on that  risk.  CoreValue then  calculates  the  increase  in  Enterprise  Value that can be realized if  operational  performance  is  improved,  by  lowering  risk.  Red Flags  identify  those  risks  which may prevent the monetization of some, or all, of the company’s Enterprise Value, and tasks are suggested to further strengthen performance and value, and reduce risk. 

Talking Points: The algorithms are based on research at the Massachusetts Institute of Technology (MIT) and proven in the market over 30 years. The research includes development of a set of private business standards (think GAAP for Operations) that are recognized as 'best practices' for each of the 18 areas measured.
MIT is the premier engineering university in the US.
CoreValue's patented methodology has been used with over twenty thousand companies to capture and grow $9B+ in Enterprise Value.
The algorithms can be broadly explained as comparing the respondent company's due diligence performance with the due diligence checklists from approx. 5,000 closed transactions.
CoreValue benchmarks the subject company against the real world.
Vetted by hundreds of professionals and organizations, including Morgan Stanley, Mass Mutual, the NACVA and one of the nation’s leading valuation teams, Business Valuation Center, the algorithms have proven accurate and the methodology is accepted as effective.
Our algorithms focus on operational performance, and a company's ability to prove it will produce and increase financial output ‐ revenues, profits - into the future, just as due diligence does.
In contrast, straight valuation algorithms use only financial data (yesterday's performance) to give a number which is largely dependent on it's purpose (e.g., divorce settlement, tax valuation, estate planning).
CoreValue's 'Enterprise Value' is not a substitute for a formal financial valuation; it is intended as a guide for the owner to enable better planning, strategy, and tactical execution in pursuit of growth opportunities and building value into the company.